25/05/2022
When has a de facto relationship broken down?
The recent decision of the High Court of Australia in the case of Fairbairn v Radecki ([2022] HCA 18) highlights the sometimes nuanced nature of de facto relationships. This case adds further to our understanding of when a breakdown of relationship has occurred.
The case was centered on whether the de facto relationship between the de facto wife, Fairbairn, and the de facto husband, Radecki, had broken down, so as to allow the Court to make a property settlement order.
The parties commenced a de facto relationship in late 2005 or early 2006. Both Fairbairn and Radecki were older and had adult children from their previous relationships. They commenced living together in Fairbairn’s home but made the decision to keep their assets strictly separate. In 2010 they formalized this arrangement with a ‘Domestic Relationship Agreement (Cohabitation Agreement)’ in which they specified they would quarantine their individual assets and that the home was to remain the sole property of Fairbairn. Fairbairn’s Will included a provision that Radecki could remain in the home for six months after her death. They later updated their Domestic Relationship Agreement to include a provision that property acquired by Radecki during the relationship would remain his alone.
In early 2017 Fairbairn was diagnosed with dementia. By that stage the parties were living in separate bedrooms. In April of 2017 Radecki travelled overseas for a holiday without Fairbairn. Fairbairn had often complained that she thought Radecki was taking advantage of her but whilst he was away she made comments to her children that she missed him.
In mid-2017 Fairbairn, being aware of her own mental decline, made an enduring power of attorney in favour of her children. Upon his return, Radecki was very upset by this and set about undoing it. He took Fairbairn to a local courthouse to revoke the power of attorney and enact a new one, favouring himself and her brother. He also arranged for a solicitor to attend upon Fairbairn and enact a new will, most notably granting him a life estate in the home.
It was these developments that ultimately led to the appointment of the NSW Trustee and Guardian (“the Trustee”) in the administration of the affairs of Fairbairn. In March 2018 the Trustee decided to move Fairbairn into an aged care facility. The Trustee proposed to pay the costs associated by selling the home. Radecki opposed this as he wanted to remain living in the house, despite having two properties to his name. He first proposed the fees be funded through Fairbairn’s superannuation and upon exhaustion of those funds, that he would meet the payments himself. He later proposed the fees be paid upfront by him to then be reimbursed from Fairbairn’s estate upon her death. Fairbairn moved into the aged care facility whilst this disagreement was occurring and her fees went unpaid and accruing interest for 15 months before Radecki agreed to commence payment.
Under these circumstances the Trustee applied for a property settlement order for the sale of the house to fund the fees and cease the accrual of interest which was ultimately diminishing Fairbairn’s estate and therefore against her best interests. In applying, the Trustee had to prove the de facto relationship had broken down to give the Court the jurisdiction it needed to make such an order. Radecki’s argument was that the de facto relationship had not ended.
In deciding the appeal, the High Court made several findings as to the circumstances of the relationship which amounted to its breakdown. Firstly, the fact that by 2017 the parties had moved themselves and their personal belongings into separate bedrooms within the home was noted as relevant. Also considered extremely important was the fact that when Radecki facilitated a new power of attorney and the making of a new will, both in his favour, he turned away from honoring a primary feature of the relationship, namely the strict separation of assets. The Court considered the related case of Stanford v Stanford ((2012) 247 CLR 108, 123) where it was held the actions of one party in not making the ‘necessary or desirable adjustments’ to the operation of the relationship were contrary to the interests of the other party and indicated the relationship had therefore broken down. Hence, by not making the necessary financial arrangements to support Fairbairn in care the Court found that Radecki had acted in his own interest which the Court found to be an act incompatible with the continuance of a de facto relationship.
This case highlights that every de facto relationship is unique. There are a multitude of factors which establish its existence or evidence its breakdown and therefore anyone needing clarification on their position should seek careful and considered legal advice.
